The author is a Forbes contributor. The opinions expressed are those of the writer.

Loading ...

Loading ...

This story appears in the {{article.article.magazine.pretty_date}} issue of {{article.article.magazine.pubName}}. Subscribe

State Seal of Mississippi. (Photo credit: Wikipedia)

Mississippi Gov. Phil Bryant is scheduled to sign into law tomorrow restrictions on the state's use of outside, contingency-fee lawyers. The law, opposed by Attorney General Jim Hood,would require all outside counsel to keep detailed time and expense records and limit contingency-fee lawyers to a total fee of $50 million.

The law would curb a practice that has raised eyebrows and made many politically-connected lawyers extremely rich. Mississippi was the epicenter of the 1997 tobacco settlement that included $14 billion in fees for the private attorneys who helped negotiate it, including such firms as Motley Rice and jailed former attorney Dickie Scruggs, who was hired by his friend, then-Miss. Attorney General Michael Moore. Here in my home state of Connecticut the tobacco bonanza showered cash on recipients including Silver, Golub & Teitell, which just so happens to be the former law firm of U.S. Sen. Richard Blumenthal, who hired them when he was the state's attorney general.

State AGs have used outside lawyers for a wide variety of similar cases, some with more than a whiff of entrepreneuralism about them. Rhode Island tapped Motley Rice to sue paint manufacturers under the novel theory they were responsible for cleaning up all the lead paint in state residences, for example; the Rhode Island Supreme Court in 2008 overturned a jury verdict that could have cost paint makers $2.4 billion.

The Mississippi Sunshine Act allows the governor and AG to continue hiring outside counsel, but those lawyers must keep detailed records of time and expenses related to a lawsuit and their hourly rates can't exceed "recognized bar rates." The AG can still use contingency-fee agreements, but must first "make a written determination that contingency fee representation is both cost-effective and in the public interest."

Any such fee is limited to 25% of a $10 million recovery, 20% for amounts between $10 million and $15 million, and 5% for amounts over $25 million with a cap of $50 million. The fees also are based only on cash paid back to the state from the litigation, not penalties or fines. The state also will establish an Outside Counsel Oversight Commission to review contingency fee contracts and require those contracts to be posted on the AG's website.

Mississippi AG Hood, according to the AP, claims the law is unconstitutional and has threatened to sue over limits to his power.

Proponents of contingency-fee lawyers say they provide valuable enforcement powers the state at no cost to taxpayers, and level the playing field against well-heeled corporations. Critics say the arrangements can provide political payoffs and cede an important measure of discretion to private lawyers who may pursue a case with little merit because it has the potential for a rich settlement. Lead-paint cases sprouted around the country after Rhode Island pioneered the litigation, for example, even though the legal theory behind them struck many as a dangerous extension of nuisance law to hold manufacturers responsible for a product that they sold legally decades earlier.